9 August 2018
Disclaimer: Forward Looking Statements This presentation/announcement may contain forward looking statements with projections regarding, among other things, the Group s strategy, revenues, earnings, trading profit, trading margin, finance costs, tax rate, capital expenditure, dividends, cash flow, net debt or other financial measures, the impact of foreign exchange fluctuations, the impact of raw material fluctuations and other competitive pressures. These and other forward looking statements reflect management expectations based on currently available data. However, actual results will be influenced by, among other things, macro-economic conditions, food industry supply and demand issues, foreign exchange fluctuations, raw material and commodity fluctuations, the successful acquisition and integration of new businesses, the successful execution of business transformation programmes and other, as of today, unknown factors. Therefore actual results may differ materially from these projections. These forward looking statements speak only as of the date they were made and the Group undertakes no obligation to publicly update any forward looking statement, whether as a result of new information, future events or otherwise. Kerry 2018 2
2018 Kerry 2018 3
H1 2018 Highlights Strong volume driven performance ahead of our markets From-food for-food heritage more relevant than ever Strategic initiatives progressed enhancing Kerry s unique customer proposition 3.6% 1.3% Kerry Market Kerry market estimates Kerry 2018 4
Interim 2018 Performance Delivering Growth & Return Volume Trading Margin Adjusted EPS* (CCY) Volume (LFL) +4.3% Trading Margin 12.2% Adjusted EPS (CCY) +9.4% ROACE* Free Cash Flow Dividends Note: * before brand related intangible asset amortisation and non-trading items (net of related tax) 1 expressed as a percentage of adjusted earnings after tax Kerry 2018 5
H1 2018 Market Overview Consumer fragmentation continues demand for product differentiation Supply chains being redefined Geopolitical and regulatory changes Speed of innovation key to success Retailers continuing to develop foodservice platforms Economic conditions relatively healthy Currency volatility persists Focus on authentic and clean label continuing to evolve Strong growth in plant protein innovations Premiumisation of taste and demand for authentic world tastes driving innovation Economic conditions varied but progressive overall Localisation of new tastes driving innovation New and evolving snacking occasions Continued growth of digital Increased regulation continues Kerry 2018 6
Revenue and Margin Growth 3,225m Volume +3.6% Margin -10bps 2,579m Volume +4.1% Margin +10bps 685m Volume +1.3% Margin -60bps Kerry 2018 7
Business Review Taste & Nutrition Revenue 2,579m +4.1 % 1 Trading margin 13.1 % +10bps Continued volume growth ahead of our markets: Meat, Beverage & Snacks End Use Markets (EUMs) growing strongly Pharma Meat Clean label portfolio, natural extracts and TasteSense sugar reduction technology performing well Foodservice growth of 6.2% Beverages Bakery & Confectionery Developing markets growth of 9.6% Winning across increasingly diverse customer base Pricing of 0.6% raw material inflation fully recovered Trading profit increased by 10.6% on a constant currency basis Snacks Dairy Meals Cereal, Sweet & Other Margin progression good underlying growth driven by operating leverage, portfolio enhancement and efficiencies, offset by currency headwinds and growth investments Note: ¹ volume growth Kerry 2018 8
Business Review Taste & Nutrition Business Growth by Region REVENUE REVENUE REVENUE 10.1% North America Meat, Snacks & Beverage EUMs delivered good growth Continued high level of product churn LATAM Mexico and Central America delivered good growth, Brazil performed well but impacted by trucker dispute Beverage, Dairy & Meat EUMs delivered good growth Foodservice chains number of new launches across the menu Southern Europe and Russia delivered strong growth Ojah J.V. enhancing plantbased protein technologies Bakery, Meals & Snacks EUMs strong growth Southeast Asia delivered an excellent performance Good progress in Middle East and Sub-Saharan Africa Strategic expansion continuing (organic and acquisitive SIAS and Season to Season) 4.1% 2.8% 2.7% AMERICAS EUROPE APMEA T&N Kerry Market Note: third party revenue and Kerry market estimates Kerry 2018 9
Business Review Consumer Foods Revenue 685m +1.3% 1 Trading margin 7.0% (60bps) Volume growth ahead of market good performance across Food to Go range Raw materials inflation eased pricing of +0.9% on average across the period Trading profit increased by 3.7% excluding the impact of transaction and translation currency Trading margin underlying growth more than offset by the negative impact of transaction currency Brexit Mitigation Programme progressing to plan Good business development in Food to Go enhancing portfolio and positioning Richmond good growth and successful launch of Richmond chicken sausage Spreads continued good growth with spreadable butter technology Category volumes impacted by reduced promotional activity Frozen retail category remains challenged Good business development in better-for-you ranges Meat snacking performed well and commenced relaunch of Fridge Raiders range Dairy snacking Cheestrings range delivered good growth Food to Go solutions Rollover growing strongly with new listings Note: ¹ volume growth Kerry 2018 10
Kerry Model Underpinning Continued Delivery Sustained volume growth ahead of market Currencies remaining volatile Managing input cost environment Continued investment for long term growth 3.6% 1.3% Authentic Taste Nutrition, Wellness & Functionality Developing Markets Foodservice Kerry Market BRL USD CAD MXN 2014 2015 2016 2017 2018 Sources: Kerry market estimates, ECB foreign exchange rates, FAO annual food price index Kerry 2018 12
H1 2018 Financial Highlights Revenue Trading profit Trading margin Adjusted EPS* Basic EPS +3.6% volume growth +8.7% constant currency (+0.5% reported) -10bps reported (impacted by 40bps fx headwinds) +9.0% constant currency +0.5% reported (post currency & NTIs) Free cash flow 79% conversion 1 Note: * before brand related intangible asset amortisation and non-trading items (net of related tax) 1 expressed as a percentage of adjusted earnings after tax Kerry 2018 13
Revenue Growth Analysis H1 2017 3,181m 1.4% H1 2018 3,225m Volume Volume 3.6% 3.6% Translation currency (6.6%) Transaction currency (0.1%) Price 0.6% Acquisition/ disposal 3.9% Kerry 2018 14
Revenue Continued Volume Growth Ahead of Markets +3.6% 3,225m +1.3% +4.1% +1.5% 2,579m +1.3% +0.5% 685m Group Taste & Nutrition Consumer Foods Kerry volume growth Market volume growth* * Kerry market estimates based on published data and company volume disclosures Kerry 2018 15
Trading Profit: Currency Impact Taste & Nutrition 2.5% (8.1%) 10.6% (0.6%) 11.2% Consumer Foods (6.9%) (1.8%) (5.1%) (8.8%) 3.7% Group 0.5% (8.2%) 8.7% (1.9%) 10.6% 2018 2017 16
Group Trading Margin Breakdown H1 2017 Operating leverage / portfolio mix Net price KerryExcel Efficiencies KerryExcel Investments Currency Acquisitions H1 2018 Kerry 2018 17
Trading Margin Business Breakdown -10bps +10bps 10.5% 13.1% 340m 339m -60bps 7.0% 48m Group Taste & Nutrition Consumer Foods Margin progression Trading margin % Kerry 2018 18
Free Cash Flow Solid Result Trading profit 340 338 Depreciation (net) 67 69 Movement in average working capital (29) 118 Pension contributions paid less pension expense (22) (23) Cash inflow from operations 356 502 Finance costs (net) (23) (21) Taxation (18) (22) Capital expenditure (net) (114) (102) Free cash flow 201 357 Cash conversion* 79% 141% Note: *free cash flow as a % of adjusted earnings after tax Kerry 2018 19
Financial Ratios & Debt Profile Disciplined Growth ROACE 12% 12.4% 13.2% Net debt: EBITDA 1 Max 3.5x 1.5x 1.3x EBITDA: net interest 1 Min 4.75x 14.8x 14.9x 644 792 141 86 2018 2019 2020 2021 2022 2023 2024 2025 (260) Note: before brand related intangible asset amortisation and non-trading items (net of related tax) ¹ calculated in accordance with lender covenants Kerry 2018 20
Other Financial Matters Deficit of 35m down 67m from year end driven by favourable movements in discount and inflation rates Charge of 15m (net of tax) due to acquisition integration and the Brexit Mitigation Programme LATAM deployment progressing well, as programme builds for North America Low inflation in H1 turning to deflation Translation headwind has eased since February guidance Translation (7%) (5%) Transaction (2%) (2%) Kerry 2018 21
Localisation Continues to Drive Innovation and Capture Market Share Private and smaller brands have seen growth in market share % The pace of this growth has increased in recent years 2.5 2.0 1.5 2.0% 1.3% Smaller brands are growing particularly in soft drinks, prepared meals and snacks 1.0 0.5 0.0-0.5-1.0 0.6% (0.6%) 0.1% (0.1%) 0.5% (0.5%) 0.2% (0.2%) 0.4% 0.3% (0.4%) (0.3%) Meeting local taste preferences is key to success -1.5-2.0 (1.3%) (2.0%) Australia Brazil China Germany India Russia UK USA Large Brands Private Label Small Brands Source: Kerry estimates, Euromonitor Kerry 2018 23
Winning with Kerry Business Model in Local Markets Consumer intimacy through proprietary insights framework In-market application labs In-country marketing Local business development Encapsulation Distillation Pyrolysis Fermentation Ultrafiltration Hydrolysis Centrifugation Extraction Kerry 2018 24
Winning with 5R Clean Label Approach Across Taste & Nutrition Replace Replace ingredient(s) with clean label alternatives while retaining key functionality, taste and/or nutrition profiles Reduce Leverage clean label technologies to reduce specific ingredients and simplifyingredient statements Proprietary research From ideation to launch Remove Eliminate specific ingredient(s) Re-position Customersasking for creative ways to reposition products in the marketplace Taste & Nutrition without compromise Re-invent Natural brand customers reinventing categories Source: Mintel GNPD 2018 analysis Kerry 2018 25
The Growing Demand for Plant Protein Plant protein for bars application TNT An Allergen Free, Vegan Protein for Functional Waters, Juices & Energy Drinks Plant protein Refresh Refresh Natural Citrus Flavours Plant protein Using our ProDiem Refresh and Taste Technology our application specialists, taste scientists and nutritional specialists developed this clean label Tropical protein water that delivers high protein, refreshment and taste. Note: 1 Kerry Primary Research 2017 Kerry 2018 26
Outlook 2018 Continued performance ahead of our markets Taste & Nutrition: unique business model delivering strong innovation with good momentum in both developed and developing markets Consumer Foods: realigned business positioned to deliver against a cautious consumer outlook Continued investment for fragmented marketplace and realisation of growth opportunities Scalable business model through continued organic and M&A investment Note: * before brand related intangible asset amortisation and non-trading items (net of related tax) ¹ Constant currency guidance range includes adverse transaction currency effect of 2% on EPS (i.e. currency neutral 2018 EPS guidance range is 9% - 12%) Kerry 2018 27
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Translation Currency Significant Headwinds in H1 USD CAD MXN BRL CNY MYR AUD GBP ZAR RUB (0%) (2%) (4%) (4%) (7%) (10%) (9%) (12%) (15%) (20%) Source: ECB rates Kerry 2018 31
Revenue Growth Components H1 2018 Taste & Nutrition 4.1% 0.6% 0.0% (7.9%) 4.6% 1.4% Consumer Foods 1.3% 0.9% (0.4%) (1.6%) 1.0% 1.2% Group 3.6% 0.6% (0.1%) (6.6%) 3.9% 1.4% Kerry 2018 32
Trading Margin by Business Taste & Nutrition 2,579 339 13.1% 2,543 331 13.0% Consumer Foods 685 48 7.0% 677 51 7.6% Eliminations/unallocated (39) (47) (39) (44) Group 3,225 340 10.5% 3,181 338 10.6% Kerry 2018 33
EPS Reconciliation Basic EPS 128.3 127.6 0.5% Brand related intangible asset amortisation 7.2 6.1 Non-trading items (net of related tax) 8.7 10.1 _ Adjusted EPS* 144.2 143.8 0.3% Retranslating PY adjusted EPS at current year average fx rates (11.5) Basic EPS 144.2 132.3 9.0% Note: * before brand related intangible asset amortisation and non-trading items (net of related tax) Kerry 2018 34
Net Debt ( m) as at 30 June 2018 Euro 1,066 276 790 Sterling US Dollar 596 381 215 Other 31 31 Gross debt 1,693 688 1,005 Cash (290) (290) Net debt 1,403 398 1,005 Gross debt 100% 41% 59% Net debt 100% 28% 72% Kerry 2018 35
Strategic Targets (2018-2022) On average across the 5 years Taste & Nutrition 4% to 6% p.a. Taste & Nutrition 40 bps p.a. Consumer Foods 2% to 3% p.a. Consumer Foods 20 bps p.a. Group 3% to 5% p.a.** Group 30 bps p.a. ** Assumes 2% above market growth Adjusted EPS Growth* 10%+ p.a. ROACE 12%+ Cash Conversion > 80% Relative TSR Outperforming Peers *Assumes constant currency I TSR = Total Shareholder Return I Cash conversion is expressed as a percentage of adjusted earnings after tax Adjusted EPS and ROACE are calculated before brand related intangible asset amortisation and non-trading items (net of related tax) Kerry 2018 36
Shareholder Analysis North America 20% UK 14% Continental Europe Rest of World 22% Ireland 3% Shares in issue at 30 June 2018: 176,287,141 Kerry 2018 37
9 August 2018